Centennial Coal (CEY)

Thermal coal producer
Centennial Coal
is a rarity among the bulk commodity producers this year, benefiting from the certainty of annual price contracts after Swiss miner Xstrata secured a healthy $US98 a tonne from its Japanese customers.

Deutsche Bank
says strong fundamentals in the thermal coal market will underpin further price rises in 2011, as the 2010 settlement is already at a 15 per cent premium to the $US85 a tonne the broker had forecast.

“We have applied this $US98 a tonne price in a mark-to-market scenario for Centennial Coal," Deutsche said.

“It results in our earnings-per-share forecasts lifting 19 per cent in FY10 and 25 per cent in FY11."

The target price has risen by 4 per cent to $5 a share and the broker sees “Centennial as a preferred coal sector exposure at this time".